Category Archives: Outsourcing

Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits.

Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.

Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.

Yet the social safety net is already showing severe strains. Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration’s proposal to extend the payments, according to the Labor Department.

Here in Southern California, Jean Eisen has been without work since she lost her job selling beauty salon equipment more than two years ago. In the several months she has endured with neither a paycheck nor an unemployment check, she has relied on local food banks for her groceries.

She has learned to live without the prescription medications she is supposed to take for high blood pressure and cholesterol. She has become effusively religious — an unexpected turn for this onetime standup comic with X-rated material — finding in Christianity her only form of health insurance.

Warm, outgoing and prone to the positive, Ms. Eisen has worked much of her life. Now, she is one of 6.3 million Americans who have been unemployed for six months or longer, the largest number since the government began keeping track in 1948. That is more than double the toll in the next-worst period, in the early 1980s.

Men have suffered the largest numbers of job losses in this recession. But Ms. Eisen has the unfortunate distinction of being among a group — women from 45 to 64 years of age — whose long-term unemployment rate has grown rapidly.

In 1983, after a deep recession, women in that range made up only 7 percent of those who had been out of work for six months or longer, according to the Labor Department. Last year, they made up 14 percent.

Twice, Ms. Eisen exhausted her unemployment benefits before her check was restored by a federal extension. Last week, her check ran out again. She and her husband now settle their bills with only his $1,595 monthly disability check. The rent on their apartment is $1,380.

“We’re looking at the very real possibility of being homeless,” she said.

Every downturn pushes some people out of the middle class before the economy resumes expanding. Most recover. Many prosper. But some economists worry that this time could be different. An unusual constellation of forces — some embedded in the modern-day economy, others unique to this wrenching recession — might make it especially difficult for those out of work to find their way back to their middle-class lives.

Labor experts say the economy needs 100,000 new jobs a month just to absorb entrants to the labor force. With more than 15 million people officially jobless, even a vigorous recovery is likely to leave an enormous number out of work for years.

Some labor experts note that severe economic downturns are generally followed by powerful expansions, suggesting that aggressive hiring will soon resume. But doubts remain about whether such hiring can last long enough to absorb anywhere close to the millions of unemployed.

A New Scarcity of Jobs

Some labor experts say the basic functioning of the American economy has changed in ways that make jobs scarce — particularly for older, less-educated people like Ms. Eisen, who has only a high school diploma.

Large companies are increasingly owned by institutional investors who crave swift profits, a feat often achieved by cutting payroll. The declining influence of unions has made it easier for employers to shift work to part-time and temporary employees. Factory work and even white-collar jobs have moved in recent years to low-cost countries in Asia and Latin America. Automation has helped manufacturing cut 5.6 million jobs since 2000 — the sort of jobs that once provided lower-skilled workers with middle-class paychecks.

“American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”

During periods of American economic expansion in the 1950s, ’60s and ’70s, the number of private-sector jobs increased about 3.5 percent a year, according to an analysis of Labor Department data by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, a research firm. During expansions in the 1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade, job growth fell to 0.9 percent annually.

“The pace of job growth has been getting weaker in each expansion,” Mr. Achuthan said. “There is no indication that this pattern is about to change.”

Before 1990, it took an average of 21 months for the economy to regain the jobs shed during a recession, according to an analysis of Labor Department data by the National Employment Law Project and the Economic Policy Institute, a labor-oriented research group in Washington.

After the recessions in 1990 and in 2001, 31 and 46 months passed before employment returned to its previous peaks. The economy was growing, but companies remained conservative in their hiring.

Some 34 million people were hired into new and existing private-sector jobs in 2000, at the tail end of an expansion, according to Labor Department data. A year later, in the midst of recession, hiring had fallen off to 31.6 million. And as late as 2003, with the economy again growing, hiring in the private sector continued to slip, to 29.8 million.

It was a jobless recovery: Business was picking up, but it simply did not translate into more work. This time, hiring may be especially subdued, labor economists say.

Traditionally, three sectors have led the way out of recession: automobiles, home building and banking. But auto companies have been shrinking because strapped households have less buying power. Home building is limited by fears about a glut of foreclosed properties. Banking is expanding, but this seems largely a function of government support that is being withdrawn.

At the same time, the continued bite of the financial crisis has crimped the flow of money to small businesses and new ventures, which tend to be major sources of new jobs.

All of which helps explain why Ms. Eisen — who has never before struggled to find work — feels a familiar pain each time she scans job listings on her computer: There are positions in health care, most requiring experience she lacks. Office jobs demand familiarity with software she has never used. Jobs at fast food restaurants are mostly secured by young people and immigrants.

If, as Mr. Sinai expects, the economy again expands without adding many jobs, millions of people like Ms. Eisen will be dependent on an unemployment insurance already being severely tested.

“The system was ill prepared for the reality of long-term unemployment,” said Maurice Emsellem, a policy director for the National Employment Law Project. “Now, you add a severe recession, and you have created a crisis of historic proportions.”

Fewer Protections

Some poverty experts say the broader social safety net is not up to cushioning the impact of the worst downturn since the Great Depression. Social services are less extensive than during the last period of double-digit unemployment, in the early 1980s.

On average, only two-thirds of unemployed people received state-provided unemployment checks last year, according to the Labor Department. The rest either exhausted their benefits, fell short of requirements or did not apply.

“You have very large sets of people who have no social protections,” said Randy Albelda, an economist at the University of Massachusetts in Boston. “They are landing in this netherworld.”

When Ms. Eisen and her husband, Jeff, applied for food stamps, they were turned away for having too much monthly income. The cutoff was $1,570 a month — $25 less than her husband’s disability check.

Reforms in the mid-1990s imposed time limits on cash assistance for poor single mothers, a change predicated on the assumption that women would trade welfare checks for paychecks.

Yet as jobs have become harder to get, so has welfare: as of 2006, 44 states cut off anyone with a household income totaling 75 percent of the poverty level — then limited to $1,383 a month for a family of three — according to an analysis by Ms. Albelda. Full Story

According to an obscure report in the European Union Times (EUTimes.net), “Russian Military Analysts are reporting to Prime Minister Putin that US President Barack Obama has issued an order to his Northern Command’s (USNORTHCOM) top leader, US Air Force General Gene Renuart, to ‘begin immediately’ increasing his military forces to 1 million troops by January 30, 2010, in what these reports warn is an expected outbreak of civil war within the United States before the end of winter.

“According to these reports, Obama has had over these past weeks ‘numerous’ meetings with his war council abut how best to manage the expected implosion of his Nation’s banking system while at the same time attempting to keep the United States military hegemony over the World in what Russian Military Analysts state is a ‘last ditch gambit’ whose success is ‘far from certain.'”

The EU Times article continues by saying, “To the fears of Obama over the United States erupting into civil war once the full extent of the rape and pillaging of these peoples by their banks and government becomes known to them, grim evidence now shows the likelihood of this occurring much sooner than later.”

The Times story goes on to say that there are “over 220 million American people armed to the teeth and ready to explode.”

The Times article concludes by saying, “Though the coming civil war in the United States is being virtually ignored by their propaganda media, the same cannot be said of Russia, where leading Russian political analyst, Professor Igor Panarin has long warned that the economic turmoil in the United States has confirmed his long-held view that the US is heading for collapse.”

Many of us would be inclined to pooh-pooh such a story, but then there is this column from Bloomberg.com entitled “Arming Goldman With Pistols Against Public,” written by Alice Schroeder. According to Ms Schroeder:

“‘I just wrote my first reference for a gun permit,’ said a friend, who told me of swearing to the good character of a Goldman Sachs Group Inc. banker who applied to the local police for a permit to buy a pistol. The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank.” Full Story

Today, on International Workers’ Day, I bring you a story on IBM’s labor practices. The post IBM Outsourcing Thousands of Jobs to India has been one of the most widely read and commented articles on this blog. Understandably, there is a lot of agitation around the issue of outsourcing American jobs. I recently spoke with Alliance@IBM Representative Rick White on what is transpiring at IBM. Following the interview are a series of videos with IBM in the news. The hypocritical comments from IBM CEO Sam Palmisano in the first video, and his audacity to ask for stimulus money, are reprehensible.

* * *

Can you tell us a little about your role in the Alliance IBM. What are you attempting to accomplish?

I’m presently the Treasurer, Web Maintenance, Organizer, and Health & Safety Representative for Alliance@IBM CWA Local 1701. Alliance@IBM was formed in August of 1999 as a union and employee advocate for IBM employees, domestic USA.

We’re a National/Local which is not an oxymoron; but appears that way. We represent all IBMers that want to be represented by CWA (Communications Workers Of America) and we also serve as a Local for each IBM USA location where we have active and public members. Since the 1990’s, 40% or more of USA IBMers have been working from home. Many of these workers are in IBM departments that are scattered around the world, i.e. their boss could be in Texas, their co-workers as far away as China; while they work at home in Poughkeepsie, NY.

We also work closely with unions in Europe and Japan that are firmly placed in IBM locations there. Since IBM is an “International” company by definition, we believe that it should be unionized internationally. That status is yet to be realized, but we’re continuing to work at it.

Our goals are preserving and improving our rights and benefits at IBM. We also strive towards restoring management’s respect for the individual and the value we bring to the company as employees. Our mission is to make our voice heard with IBM management, shareholders, government and the media. While our ultimate goal is collective bargaining rights with IBM, we are building our union now and continue to challenge IBM on the many issues facing employees from off-shoring and job security to working conditions and company policy.

Our membership is large by local standards, but very small by national standards. We have @5000 total supporters and about 360 dues paying members, out of a company population of about 120,000 USA wide. The reasons we formed in 1999 were centered around IBM’s treatment of it’s workers; both blue-collar and white-collar in regard to the Pension swindle and layoff practices, and other issues in the 1990’s. We forced IBM to change its policy on its Cash Balance pension plan in 1999, from no choice for IBMers with less than 25 years of service; to the option for an additional 35,000 IBMers (40 years of age and 10 years of service) to choose between the Cash Balance pension and the defined benefit pension (the one workers with 25 years service had).

We even got help from the Senate Finance Committee, when they asked then IBM HR director, Tom Bouchard to testify before them and explain why there was such a disparity between the two plans. Mr. Bouchard announced and offered the choice between the two plans on the day he testified before the committee.

How many jobs have been lost at IBM in 2009? Prior to then?

That is a hard question to answer. Mostly because of the churn, over the years and the offshoring and outsourcing; which has been happening in IBM, steadily since the 1990’s. The other reason is that IBM rarely announces the numbers. When they do; its a hard figure to confirm. IBM USA employed roughly 135,000 people in the 1990’s…we’ve run the calculations many times, and the number keeps changing because of the way IBM does business in other countries. We can never get a net job loss. My guess is somewhere between 15,000 and 25,000 jobs or more, since the 1990’s. Again, it’s very hard to know for sure. (Note: Resource Action is IBM’s term for firing. it’s not a lay-off because the workers are not recalled to work.)

How many of those job losses were a result of outsourcing?

Again, very difficult to answer. It’s very complicated; or appears to be as a result of IBM’s practices world wide. In 2007 and 2008 IBM replaced 14,000 jobs world-wide. We still don’t know for sure, how many of those were here in the US.

Did IBM offer to relocate the employees to the countries the jobs were being outsourced too?

No. IBM usually tells employees being RA’ed that they have 30 days to find another job within IBM; however, behind the scenes, IBM freezes internal IBM hiring for IBMers being fired. It’s nothing but an egregious ruse.

You may also be referring to an IBM company policy called “Project Match”; which offers IBMers that are fired, an “opportunity” to move out of the United States and go to IBM Brazil, IBM Russia, IBM India, IBM China, IBM Vietnam, IBM Philippines, etc. Supposedly, IBM pays for the trip, but that’s it. Once the ex-IBMer leaves he/she cannot have their USA IBM job back. They must work for the IBM location they chose and figure out how to function in the same job capacity, for say 40% of their pay or less in their new ‘home’ country. They are also assigned the additional task of training the employees in that country, once they arrive.

For example, an Operation Analyst may make between $40,000 and $60,000/year working in the US for IBM. When he/she becomes an IBM India employee in the same job, they make about 250,000 rupees or $5,000.00/year. Living conditions are unknown to us so far. Rick Clark, fired IBM employee spoke to the press about his experience during his RA and subsequent offer to go to another country. To read the interview with Rick Clark: If You Want a Job…

Were there employees who chose the option of relocation?

There may be. We haven’t confirmed any yet. Our Comments sections have mentioned people actually doing it, but they didn’t leave their name or contact information. My guess is, not many take it.

What is the solution to keeping these jobs in the U.S.?

One step to take is for IBMers and ex-IBMers to speak out about this and come forward and testify, if necessary, to the Federal govt about this program and the offshoring. Globalism may not be stopped; but we should stop giving bailout money and tax breaks to companies that offshore and outsource, without regard to the impact on the USA.

IBMers need to organize and get IBM to the bargaining table. In exchange for very limited outsourcing, a union contract could stipulate a process that benefits both the workers and the company. The details could be worked out to everyone’s advantage.

Explain what an “At Will Employee” is.

Basically, “At Will Employee” means that a worker has the right to quit without notice for any reason or no reason; and the Company has the right to fire the worker without notice for any reason or no reason. The workers have no bargaining rights whatsoever, under this policy. The Dept. of Labor will not help workers who are fired under this policy. That’s why a union contract is so important. Most workers in the USA today do NOT understand “At Will Employee” policy.

How are labor laws skewed in favor of corporations (such as IBM) over the employee?

They have high priced lawyers that have subverted labor law in favor of the corporations. They have used labor law cases and sympathetic labor board members to turn labor law against the employees. They use their power, money and influence to run roughshod over workers.

Most present day labor policies are derived from the NLRB decisions on the multitude of cases brought before the NLRB, between unions and management of a company. These are disputes, over a large list of reasons for filing an Unfair Labor Practice or other reasons, between labor and management. Many are only significant to the particular company or union and do not affect the whole USA. For example, a union organizer gets fired for “misconduct” during an organizing campaign at a particular company. The union files a ULP (Unfair Labor Practice) and the case goes to an NLRB appointed administrative judge. The judge decides in the union’s favor, and the company appeals to the NLRB labor board. The NLRB also decides in favor of the union organizer. The company appeals to the US District court of appeals The Court decides in favor of the company. This means only union organizers in that Court’s district are affected by that decision; however, if the union appeals to the Supreme Court, and the Court hears the case and then decides in the company’s favor, the decision applies to ALL union organizers in that situation, in the entire country.

A relatively recent case (2004) was the reversal of the Weingarten Rights. The right of employees to have union representation at investigatory interviews was announced by the U.S. Supreme Court in a 1975 case (NLRB vs. Weingarten, Inc. 420 U.S. 251, 88 LRRM 2689). These rights have become known as the Weingarten rights. The reversal basically removed Weingarten Rights from non-union workers, enacted in 2000, under the Clinton Administration. Which means that workers called into the boss’s office for a disciplinary meeting or investigatory interview, etc.; no longer have the right to have a co-worker witness the meeting and/or exchange between the affected worker and his/her boss.

IBM’s reported plans to lay off thousands of U.S. workers and outsource many of those jobs to India, even as the company angles for billions in stimulus money, doesn’t sit well with employee rights advocates.

Business Week reports that IBM’s workforce increased from 386,558 in 2007 to 398,000 at the end of 2008.

IBM employees are being dealt a double blow, said Lee Conrad, national coordinator for Alliance@IBM, a pro-union group that has been fighting IBM’s outsourcing for years.

“We’re outraged that jobs cuts are happening in the U.S. and the work is being shifted offshore,” Conrad said. “This comes at the same time IBM has its hand out for stimulus money. This to us is totally unacceptable.”

IBM wants a share of the money in President Obama’s American Recovery and Reinvestment Act for projects updating power grids, creating electronic health care records and furthering the use of broadband.

“In the research we’ve done working with the transition team, we know that $30 billion could create 1 million jobs in the next 12 months,” IBM CEO Sam Palmisano said in January.

The problem is where those jobs would be, said Ron Hira, a professor of public policy at the Rochester Institute of Technology.

The second-biggest bank of the US, JP Morgan Chase, which acquired Washington Mutual and Bear Stearns recently, will increase its outsourcing to India by 25% this year to nearly $400 million. It will also manage the integration of the acquired companies from India to bring down the cost of integrating different information technology (IT) systems.

Right now, JP Morgan outsources $250-300 million worth of IT and back-office projects every year to Cognizant, TCS and Accenture, apart from to its own captive centre in Mumbai.

“JP Morgan CIO Guy Chiarello said last week that he will increase outsourcing to India, and will drive several integration projects from there,” a New York-based expert, familiar with JP Morgan’s outsourcing plans, told ET last week, on conditions of anonymity. A spokeswoman for JP Morgan India could not reply to an email query sent by ET on Friday, and the bank’s spokesperson in the US too did not reply.

“JP Morgan is one of the first banks in the US to have fleshed out its outsourcing
strategy ever since the banking meltdown happened. Many others are still undecided about their IT spend,” said a senior official at one of the technology firms, who did not wish to be quoted.

The bank, which cancelled its $5-billion outsourcing contract with IBM in 2004 – following the merger with Bank One – had brought back around 4,000 IT staff in-house after the new CIO Austin Adams had proposed a “do-it-yourself” strategy for the merged entity.

The truth is starting to seep out. Because of the need for more money to finance the latest bailout―the Obama economic stimulus plan―America is going further in debt to the Chinese Communists. Our country is officially being sold to the highest bidder. And we have striking confirmation of this fact from Secretary of State Hillary Clinton.

The good news is that a correspondent for the mainstream media―Wyatt Andrews of CBS News―has figured this out and has managed to get on the air with his terrifying findings. Andrews’ report on the Friday CBS Evening News with Katie Couric was direct and to the point. Clinton is in China to beg for a handout.

“The truth is the Administration needs China’s help. America’s stimulus is very expensive and the U.S. wants China to help finance it,” Andrews reported. This is what America has become―a country that sends its Secretary of State abroad to beg for money from foreigners. In this case, it’s a communist dictatorship that forces women to have abortions, tortures Christians, and threatens the freedom and democratic government of Taiwan.

So the cost of the “stimulus” is more sacrifice of American independence and sovereignty, as well as our own values, ideals, and commitment to human freedom. It is a sad day both for America and China.

The number of people receiving unemployment benefits has reached an all-time record, the government said Thursday, and more layoffs are spreading throughout the economy.

The Labor Department reported that the number of Americans continuing to claim unemployment insurance for the week ending Jan. 17 was a seasonally adjusted 4.78 million, the highest on records dating back to 1967. That’s an increase of 159,000 from the previous week and worse than economists’ expectations of 4.65 million.

As a proportion of the work force, the tally of unemployment benefit recipients is the highest since August 1983, a department analyst said.
The total released by the department doesn’t include about 1.7 million people receiving benefits under an extended unemployment compensation program authorized by Congress last summer. That means the total number of recipients is actually closer to 6.5 million people.

Businesses continued to hemorrhage jobs Thursday. Ford Motor Co. reported a fourth-quarter loss of $5.9 billion and said its credit arm would cut 20 percent of its work force, or 1,200 jobs. Eastman Kodak Co. said it’s cutting 3,500 to 4,500 jobs, or 14 to 18 percent of its work force, as it posted a $137 million quarterly loss on plunging sales of photography products

Archives

Archives

Visitors

124,874

It is Our Responsibility to Examine and Change Society

The paradox of education is precisely this - that as one begins to become conscious, one begins to examine the society in which he is being educated. The purpose of education, finally, is to create in a person the ability to look at the world for himself, to make his own decisions, to say to himself this is black or this is white, to decide for himself whether there is a God in heaven or not. To ask questions of the universe, and then learn to live with those questions, is the way he achieves his own identity. But no society is really anxious to have that kind of person around. What societies really, ideally, want is a citizenry which will obey the rules of society. If a society succeeds in this, that society is about to perish. The obligation of anyone who thinks of himself as responsible is to examine society and try to change it and to fight it - at no matter what risk. -- James Baldwin